Mayor details tax plan

Thursday

Oct 4, 2012 at 11:30 AMOct 4, 2012 at 11:36 AM

Lois Westermeyer

About 30 members of the community and city council attended a meeting Wednesday evening to hear details of Pontiac’s plan to raise its sales tax and offer a property tax rebate.While the half-percent rise would bring in an estimated $900,000 more to city coffers, the city is pledging to rebate at least $500,000 to commercial and residential property owners alike.The city’s plan also calls for establishing a pool fund and residents can choose to allocate none, some, or all of their refund to help pay for an outdoor swimming pool.The sales tax increase referendum will be on the Nov. 6 ballot as a yes or no proposition.Mayor Bob Russell said state and federal money have been declining in recent years, while mandates by both have increased and it has been a struggle to attain a balanced budget.“And the number one complaint we hear is the high property taxes. They are detrimental to our community,” he said. “New homes are not being built here and retired couples are selling their homes. It’s not good for Pontiac. The city’s primary goal in this change is to provide property tax relief.”The city has tightened its fiscal belt, eliminating six positions throughout city departments, deferring equipment purchases and halting most travel, the mayor explained.“Revenues from the state have been flat or declining, especially from the general fund property tax, which has declined $115,000 in the last 10 years.” However, mandates for the police and fire pension funds, municipal retirement and liability funds have increased a total of $900,000 during that same 10 years. City Administrator Bob Karls noted that the city is also mandated to replace emergency radios that will use a new bandwidth, at a cost of $250,000.“We applied for federal funding and were notified two months ago that we would not receive any funds for this. The county also was looking to help, but we have not heard anything on that,” Karls said.The only bright spot, the mayor stated, has been increased sales tax revenue for the city.“At the same time that the economy is negatively affecting a lot of communities, our sales tax numbers are rising. It’s time to capitalize on this,” he stated.Russell showed that during a 10-year period, sales tax in Pontiac climbed about $1.3 million, from $1.6 million in 2001-01 to $2.3 million in 2011-12.The city’s sale tax is currently 6.25 percent, or 6.25 cents per every $1 spent on select purchases within the city. The administration is proposing a half-percent increase, to 6.75 percent, which is still less than many area towns, including Streator at 7.5; Bloomington and Normal, each at 7.75; East Peoria at 8; Lincoln at 8.25; and Joliet at 8.75 percent. Morris is at 6.25 percent at present.The sales tax is placed on general merchandise items, gas, alcohol, tobacco, dine-in and carry-out food, restaurant orders, soft drinks, pet food and supplies, etc. The tax will not apply to non-prepared groceries, prescription medications, medical appliances and titled or registered property such as cars and boats.According to state statistics, Russell said residents pay just one-third of the city’s sale tax revenues, while travelers and out-of-city residents pay the other two-thirds.The mayor explained the tax raise would equal 50 cents on every $100 spent purchasing general retail merchandise, or $5 on every $1,000 spent.“If you spend $40 a week dining out, you’ll pay $10.40 more annually with this increase. If you spend $50 for gas, you’ll spend $13 more in taxes. If you spend $100 a week on miscellaneous items, that’s $26 more a year on tax. Most people will be rebated more than that.”The mayor had a chart that showed the owner of a home with an estimated equalized assessed value of $75,000 paying $492 in city taxes. That homeowner would receive an approximate $81 rebate. The owner of a $100,000 home, paying $657 in taxes, would be rebated $108.The rebates will be determined based on percentages, said Russell.The city will take its total assessment of property taxes and then what percentage is represented by each property will be the percentage of rebate the property owner receives. “Several people have asked why we just don’t adjust property taxes and the simple answer is we can’t,” added Karls. “With tax caps you cannot adjust. The most we could do is raise the sales tax up to 1 percent.”When asked why the city did not seek the full 1 percent, which would still be in line with other area communities, Russell stated, “We’re not greedy. We want this to pass, we want to give property tax relief.”The mayor also stated the relief could help those who do not own property, but lease or rent.“If owners get tax relief, then renters might not face a rental increase, or at least not as big as one. This could really help everyone,” he said.However, some were concerned that the tax rate, if approved, is set, while the city would have to vote annually to rebate property taxes.“The plan is to approve this annually,” Russell said, “but we cannot bind future councils. But voters have the power to question any future candidate about this issue and where they stand. I foresee the rebate continuing.”The city will be sending out brochures further detailing the proposal along with sewer bills later this month and the mayor is scheduled to speak at several civic meetings, including an Issues and Eggs breakfast Thursday, Oct. 11, at Baby Bulls.